Longer Gilts Dart Up, Call Grooved

Government security prices went up by 30-50 paise at the medium and long ends of the maturity scale today after remaining rangebound on Thursday.

Call money rates continued to remain in the 6.50 per cent to 6.75 per cent band.

Government security prices opened slightly higher and continued to go up during the day.

Dealers said that there was a news agency's report that Pakistan president had negated the possibility of any war boosted the sentiment in the market.

Said a primary dealer: "The liquidity in the market was good. Pakistan president's statement helped the market to move."

The good liquidity condition in the market was helped by the Rs 744.5 crore of inflow on account of coupon payment of 11.03 per cent 2012 government security.

The Reserve Bank of India (RBI) deputy governor today said that central bank has not fixed any time-frame for cutting the cash reserve ratio to three per cent. But it did not have any impact on the market, dealers said.

In the call money market, liquidity was ample and the overnight rates were soft. Call rates opened in the range of 6.60 per cent to 6.75 per cent and closed in the range of 6.40 per cent to 6.60 per cent.

The treasury head of a private sector bank said: "as the call money rates were very during the week, most of the banks have already covered their cash reserve requirement for the current reporting fortnight. Hence the demand was low today and the rates were mostly around the refinance level."

The Reserve Bank of India (RBI) today received three bids of Rs 6,180 crore in its three-day repo auction. All the bids were accepted at a cut-off rate of 6.50 per cent. There was no bid in the three-day reverse repo auction.

Government security prices are likely to move up by 15-20 paise tomorrow with most of the activities concentrated at the medium to long end of the market.

Dealers said that the in absence of any bad news the rally will be driven by liquidity. Call money rates are likely to remain in the range of 6.40 per cent to 6.75 per cent.